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Government announce Draft Registration of Overseas Entities Bill

Monday 23 July 2018

Criminals who profit from some of the UK’s most exclusive properties through the illegal use of overseas shell companies face up to five years in jail for concealing the true identity of their owners, under new draft laws laid in Parliament today.

For the first time, foreign companies owning UK properties will be required to reveal their ultimate owners on the world’s first public register of overseas entities’ beneficial ownership.

The register forms part of a wider crackdown on criminals laundering their dirty money in the UK and the new information it reveals will make it easier for law enforcement agencies to seize criminal funds. The penalties include:

a ban on any foreign entity selling or leasing property without first publicly declaring its beneficial owner; an individual found to have committed this offence could face up to five years in jail and an unlimited fine

individuals who fail to register overseas entities when instructed face up two years in jail and an unlimited fine

individuals who knowingly try and deceive the register by providing false information face up two years in jail and an unlimited fine

Under the new draft laws, companies will also be required to provide annual updates to Companies House to ensure the information on the register is up-to-date.

Business Minister Richard Harrington said: “The UK is known around the world for its open and dependable business environment and this reputation is maintained by keeping under review our required high standards. That is why we are introducing the world’s first public register which will expose the ultimate owners of overseas shell companies, giving authorities the information, they need to come down on criminals who launder their dirty money through the UK’s property market and to seize the proceeds of crime. While the vast majority of foreign companies which buy property in the UK do so legitimately, this world-leading register will help ensure the UK remains a great dependable place to work, invest and do business.”

The register follows the introduction of the Criminal Finances Act 2017, part of the Government’s Anti-Corruption Strategy, which provides new powers such as Unexplained Wealth Orders to law enforcement agencies to help them seize the proceeds of crime.

Having already recovered more than £2 billion of criminal assets under the Proceeds of Crime Act, while the Government has recovered more than £3 billion extra since 2010 through recovery under additional powers, the UK has been seen to have taken a leading role in the fight against money laundering.

UK Government minister for Scotland Lord Duncan said: “For too long criminals have been able to use the property industry as a front for investing dodgy funds, hiding dirty money and evading the law. This stops now. Most people who invest in property across the UK do so fairly, and legitimately, but the UK Government is clear that there is no longer any room for those that seek to exploit the system to hide.”

New data also released today shows nearly three-quarters of those surveyed in the UK property market agree that this new register will lead to an increase in transparency and will reduce the potential for illegal activity. The register is due to go live by 2021.

NAEA Propertymark Chief Executive, Mark Hayward commented: “We welcome the Government’s draft Overseas Entities Bill laid before Parliament today, having previously called for a public register of overseas companies owning property in the UK to be set up as part of our response to the Treasury Select Committees inquiry into Economic Crime. Property is a high-risk sector for money laundering because any foreign company can buy property in the UK without having a presence in the country. Criminal funds can be concealed and made to look legitimate through an untraceable ‘company’ and subsequently the purchasing of property. When agents try to determine the true, or ‘beneficial’ owners, they find only documents listing shell companies. Furthermore, houses bought with laundered money often sit empty, taking homes away from the market that could be used for families and having a further negative impact on the wider community. To maintain integrity in our housing market it is vital to know who the ultimate owner of a property is. We look forward to working with Government to help implement this legislation.”

The Department for Business, Energy & Industrial Strategy are seeking views on this draft bill and have specifically invited estate agents to respond. The consultation closes on 17 September 2018.

Latest News

24 May 2019

The National Crime Agency (NCA) recovered around £6 million worth of assets including an award-winning luxury hotel and a £100,000 Bentley from alleged members of an international money laundering group after an eight-year investigation.
Read More...